Walk into any Costco on a Saturday, and you’ll see a similar ritual.
Shoppers push oversized carts past towering pallets, grab a bulk bag of coffee, and top off the tank on the way out.
That last stop has become a big deal lately. Gas prices have been rising, and members have been lining up at the pump in record numbers.
Costco (COST) estimates it saved members more than $3.2 billion on gas in fiscal 2026 compared with the average price in its markets, CEO Ron Vachris said on the company’s fourth quarter earnings call on Sept. 24.
Shoppers are hunting for value amid elevated gas prices, rising inflation, and the possibility of multiple interest rate hikes.
Why Costco stock thrives when wallets feel squeezed
Costco was founded in 1976 and is based in Issaquah, Wash. It now runs 939 warehouses worldwide, and it plans to open 33 more in fiscal 2027, including five relocations.
The business runs on membership, which helps Costco keep prices low and creates a competitive moat.
Costco ended its fiscal year with 84.1 million paid members, up 3.8% from a year earlier. In the U.S. and Canada, 92.3% of members renewed memberships.
Related: Walmart takes on Costco with expanded gas savings
Membership fee income rose 7.3% to $1.849 billion in the quarter. A loyal customer base allows Costco to generate stable cash flow across business cycles.
CFO Gary Millerchip said overall inflation is running in the low single digits, which will impact household spending.
But pressure is building in pockets.
- Higher memory costs have pushed up prices on consumer electronics.
- The conflict in the Middle East has lifted prices on gas, motor oil, and plastic resins.
- Beef, steel, and flour prices are also still rising, while cheaper eggs, dairy, butter, and cheese have helped balance things out.
You can see the strain in one line of the accounting.
Costco took a $152 million LIFO charge in the quarter, up from $43 million a year ago. In plain terms, that charge grows when the goods sitting on Costco’s shelves cost more to replace.
Costco stock gets a tariff refund twist
Here’s the twist. Costco began receiving refunds on certain tariffs it had paid.
The company collected $184 million in the fourth quarter, including $174 million in refunds and $10 million in interest. That is a little more than a third of the total refunds it expects, according to Millerchip.
Costco could have simply banked the money. Instead, it chose to give much of it back to members.
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Most of that reinvestment came through price cuts in the second half of the quarter. Everyday items in produce, meat, and beverages got cheaper, along with home furnishings and hardware.
Millerchip shared several Kirkland Signature price cuts on the call:
- Walnuts fell from $13.79 to $9.99, down more than 27%.
- Colombian whole bean coffee fell from $21.99 to $19.99.
- Coarse black pepper fell from $6.99 to $5.99.
- Dry facial towels fell from $19.99 to $18.99.
The company said Kirkland Signature items already cost at least 15% to 20% less than comparable national brands.
Vachris explained the thinking behind the move: “At Costco, when we see lower prices, we see an opportunity. We’ve made significant tariff investments. Unit growth has been fantastic.”
Not everyone is convinced the cuts are moving the needle.
UBS analyst Michael Lasser noted on the call that Costco had put roughly $100 million into lower prices, yet monthly sales had cooled slightly.
Millerchip pushed back gently. “Our members continue to show resilience in their spending,” he said.
What it means for Costco stock price
Net sales in the last quarter rose 11.2% to $93.87 billion for the 16 weeks ended Aug. 30.
Net income came in at $2.998 billion, or $6.75 per share, including a one-time boost of 15 cents per share from tariff refunds after the price cuts.
Strip that out, and earnings per share still rose 12.4% from $5.87 a year earlier.
Shoppers also came in more often.
Traffic rose 3.3% worldwide. Excluding gas and currency swings, comparable sales grew 6.7%, a pace Millerchip said has held steady for about a year.
More refunds are on the way. Costco has already received a similar amount in the first quarter of fiscal 2027, and it plans to reinvest most of it in member value.
That could mean more price cuts ahead. It also means earnings will carry some unusual noise for a while, so Costco plans to break out the net impact on future calls.
Millerchip was careful not to predict where inflation goes from here. He pointed to the Middle East conflict and tariff uncertainty as two big wild cards.
The next clue arrives on Oct. 7, when Costco reports September sales.
And for shoppers who just want a treat after checkout, there’s one more bit of news. The food court churro is returning to all U.S. locations for a limited time.
